Super rules

In most cases, businesses must allow their employees to choose their own super fund.

There are three exceptions to this rule:

1. Employment is governed by an industrial instrument (e.g. a workplace agreement) which specifies the fund or funds into which payments must be made
2. The employee is a member of a defined benefit fund that meets certain conditions
3. Some state and federal government employees

When a new employee joins your company, he or she may nominate their preferred super fund. As long as it complies with superannuation law, and the employee has given you all the appropriate information, then you must pay the necessary super contributions into that fund.

Likewise, an existing employee can notify you of their nominated super fund at any time. In both cases, employees should fill out a Standard Choice form and return it to you as soon as possible. By law you are required to give new staff members a superannuation Standard Choice form within 28 days of them starting work.

If an employee doesn’t specify a preferred super fund, then you must pay their super into a default fund with a MySuper option for contributions. More on MySuper.

Many Modern Awards specify the default funds you can choose from, and you can use our Default Super Fund Finder to work out which Industry SuperFunds are listed in awards relevant to your employees.

While there’s no limit to the number of times an employee can request a change of preferred fund, you generally only need to act on their request once every 12 months.

As of 1 November 2021, all eligible Australian workers will be stapled to their main existing superannuation fund. This means that if new employees do not supply details of a nominated fund, employers must use the ATO database to check if they have a stapled fund. As long as the stapled fund complies with superannuation law then you must pay the necessary super contributions into that fund.

If an employee doesn’t have an existing super fund and doesn’t nominate one, then you must pay their super into a default fund with a MySuper option for contributions. More on MySuper.

Many Modern Awards specify the default funds you can choose from, and you can use our Fund Finder to work out which Industry SuperFunds are listed in awards relevant to your employees.

The Super Guarantee (SG) is a compulsory contribution made by all employers on behalf of each of their eligible employees. The contribution is paid directly to each employee’s nominated super fund, or a default fund on their behalf.

If you run a business that employs staff, then it is likely you will be required to make Super Guarantee contributions.

The amount paid is set at a percentage of each eligible employee’s Ordinary Time Earnings (OTE). The Australian Government determines the Super Guarantee rate which, in 2024/25, is set at 11.5% of OTE. OTE generally includes the employee's regular wage plus any shift loadings, commissions, paid leave and some allowances.

Some companies pay their Super Guarantee contributions at the same time as they pay their staff wages, and all employers must make payments at least quarterly.

A superannuation clearing house can save you a lot of time and paperwork if you need to pay into numerous super funds.

Visit our Superannuation Guarantee page more information.

Unless you hold a Financial Services Licence you are not allowed to provide your employees with any information about any fund other than factual information or information regarding the default fund. It is up to the employee to find out how to join a fund, get product information and disclosure statements, and ensure they have filled out their membership applications correctly. You can direct an employee to government websites which allow for the comparison of different super funds.

Likewise, an employer must not try to influence an employee’s choice of fund.

You are required to keep records:

• Detailing whether employees have or have not been offered a choice of fund
• To confirm that your company’s default fund is compliant and meets minimum life insurance requirements
• Five years to show that all financial obligations have been met, and
• Of written information provided to employees and proof that superannuation contributions have been made to employee's chosen funds or the default fund.

Penalties may apply if these records are not kept.

Under the Fair Work Act, you are obliged to include super contribution amounts on employee payslips.

You are also required to tell employees (within 28 days of starting work) which default fund their contributions will be paid into if they don’t provide details of their preferred super fund.

While you are not allowed to give financial advice to employees (unless of course you hold a Financial Services Licence), you can assist employees if they want to boost their super through salary sacrificing. Salary sacrificing arrangements must have the agreement of both the employer and employee.

A salary sacrifice contribution is a before-tax payment out of an employee's wage into their super fund and may carry with it some good tax advantages for the employee. 

You should enter into a written agreement with your employee which states the terms and conditions of the salary sacrifice arrangement. Salary sacrifice arrangements can only apply to future payments not past earnings, and there are limits to how much a person can voluntarily contribute, before they lose the tax concessions. Super funds do not differentiate between employer SG contributions and salary sacrifice amounts, therefore they are both assessed against an individual’s concessional contributions cap.

Make sure you keep written records of all salary sacrifice agreements made between you and your employees as you are required to report these amounts on the individual’s payment summary (reportable employer super contributions).

Note: From 1 January 2020, salary sacrificed contributions can no longer be considered super guarantee contributions. For example, if your employee elects to salary sacrifice 5% into their super, you will still be required to pay the current super guarantee rate or more of your employee's ordinary time earnings, and the salary sacrifice amount, into their super to avoid the super guarantee charge. Your employee's salary sacrifice agreement should be in addition to the compulsory Superannuation Guarantee. You should not include any part of your employee's salary sacrifice into mandatory super contributions.

By law, employers must pass their employees' tax file numbers (TFN) on to their super fund for authorised purposes. You need to do this no later than:

• The day on which you make the first super contribution for that employee or
• Within 14 days of receiving their TFN, if not available at time of first contribution 

If a super fund does not have a TFN for one of its members, then that member can be taxed at a much higher rate and the super fund will not be able to accept any voluntary contributions made by, or on behalf of that individual. This means that eligible individuals could miss out on the co-contribution and other benefits.